Cash Extraction for Directors Shai Patel Generation Financial Services

Agenda  About Generation  Pensions - SASS, SIPP & Flexible Retirement  Enterprise Investment Schemes  Venture Capital Trusts

Pension Plans Still one of the most tax efficient forms of investment saving in the UK. The advantages  Tax efficient;  tax free cash at 25%  tax free growth (almost)  can be low or high risk (fund selection)  HMRC and Government are supportive  Established sophisticated market place  Invest in commercial property  Loan back funds to Company

Pension Plans The disadvantages  You need to be over 55 to access funds  Advice / administration needed – product and fund  Process driven – forms, admin, time  Tax on exit (planning opportunity)  Cost (fees and charges)  Earning over £150,000 per annum  Max allowance £1,000,000 (April 16)

Example: Pension Salary or Dividends Corporation Tax Employer National Insurance Employee National Insurance Income Tax (assuming 25% tax Free cash) Dividend Tax Per £1000 of business profit in your pocket Percentage effectiveness against pension Basic Rate Salary0%13.8%12%20%0.0%£ % Dividend20%0% 7.5%£ % Pension Contribution 0% 15%0.0%£ % Higher rate Salary0%13.8%2%40%0.0%£ % Dividend20%0% 32.5%£ % Pension Contribution 0% 30%0.0%£ %

You will need income when you retire, so don’t be like Mr Grimley!

Perhaps a mix of all three is the better option £100,000 profit available for remuneration – 2015/16 Salary & Dividend & Pension up to Annual Allowance £7,000 £42,400 £40,000 SALARY DIVIDENDS PENSION BANK £46,762 PENSION £40,000 HMRC £13,238 SALARY £7,000 £74,400 DIVIDENDS £0 PENSION Salary & Dividend BANK £70,762 HMRC £29,238 PENSION £0 DIVIDENDSWAP? Bank £70,762 Bank £46,762 BeforeAfter Pension £0 Pension £40,000 20% = = £28,000 = = 17% RISK FREE RETURN?

Summary The route to take is dependent upon what you wish to do with extracted cash.  Suggest a mix of options  Consider appetite to risk?  Appetite to tax savings in general?  Team approach – advice from Barnes Roffe and GFS  Free initial consultation

Legal and Compliance These slides are intended as an overview of your employers pension scheme and the new pension rules and are based on our opinion of the subject and our understanding of the rules as currently published. The Generation Financial Services Limited is authorised and regulated by the Financial Conduct Authority Limited and is Registered in England and Wales No Registered address: Charles Lake House, Claire Causeway, Crossways Business Park, Dartford, Kent DA2 6QA.